Shares system backed for state

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A Communist Party mouthpiece has defended the promotion of shareholding systems for state enterprises.

Turning them into shareholding companies did not dilute their socialist nature, Outlook magazine argued.

The latest issue of the weekly publication said shareholding was one of the many systems state-owned enterprises must contemplate when reforming their structure of ownership.

'We have been arguing over the shareholding system for many years. The focus of the debate is whether a shareholding company is public or private,' it said.

'Our state-owned enterprises will not lose their socialist roots just because they become shareholding companies . . . The shareholding system helps to clarify the relationship of property rights of enterprises and accelerate the development of new channels to raise capital.' But the magazine warned against irregularities in the course of change, pointing out government departments could monitor the process and take action to correct problems.

Communist Party boss Jiang Zemin has said firms can experiment with the shareholding system. But debates over its merits have flared up as the 15th Party Congress approaches.

The system is expected to be formally endorsed in a political report by the congress, which is scheduled to start on Friday.